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Economic Impacts Associated with Climate Change Adaptation

Climate change impacts will affect the economy as the nation adapts/responds to stresses on water resources in the form of droughts and floods, changes in agricultural and livestock production, sea-level rise and storm surge, wildfires, and ecosystem changes, as well as health impacts related to heat stress, diseases, extreme weather events, and poor air quality. While there will be costs to the economy associated with these climate change events, the potential exists for economic benefits as some sectors experience gains.

$6.9 billion: value of property at risk to sea-level rise over the next 75 years

$3.9 billion: loss of recreational benefits for beach and fishing trips over the next 75 years

$1.4 billion: cost of business interruptions due to more intense hurricanes over the next 75 years

Local governments can explore adaptation options by taking steps to reduce the vulnerability of infrastructure, property, agriculture, and other human and natural systems to the impacts of climate change.

Economic Impacts Associated with Climate Change Mitigation

Local governments can implement programs and take actions to reduce GHG emissions and potentially reduce the severity and cost of future impacts while saving taxpayer dollars, helping consumers save money and creating jobs within their communities. Policies targeted at the entire community or at specific sectors, including government operations, can make economic sense even without considering future impacts of climate change.

In addition to community-wide initiatives, many local governments have found tremendous economic benefits through reducing GHGs in their own government operations as illustrated in the examples below.

Energy Efficiency Programs

Reducing energy use in local government operations and services can reduce both GHG emissions and the amount of money spent on energy. With these economic savings, local governments can then lower taxes and/or make money available for reinvestment into other government programs.

As part of its energy management initiative, the Davenport Community School District in Iowa realized over $1.2 million in energy savings in one school year. According to Bill Good, the district's director of operations, “...if we had not done this, we would be facing major staff and program reductions...the $1.2 million in energy savings will fund 20 teaching positions.”

Capturing Methane from Landfills

Some municipalities operate landfills that emit methane, a potent greenhouse gas. Municipalities can install technologies to capture methane before it enters the atmosphere. Captured methane can then be sold as fuel and may be eligible to generate carbon credits that can be sold on the voluntary carbon market to companies or individuals choosing to offset their GHG emissions.

The Lancaster County Solid Waste Management Authority in Pennsylvania spent approximately $1.5 million in 2005 to install machinery that captures methane from its municipal landfills. By 2008, the county started generating about $50,000 per year selling the gas and had earned about $320,000 through the generation of carbon credits.

Through these and other measures, there is great potential for local governments to help mitigate climate change through activities that can increase investment in and expansion of clean technologies and services, create jobs, save taxpayer dollars, and increase tax revenue through a growing clean energy economy. While most mitigation measures do require up-front investments, many of those investments quickly pay for themselves in energy savings and can yield significant economic benefits that can be reinvested into other community priorities.

Assessing the Multiple Benefits of Clean Energy

The importance of and approaches to calculating or estimating energy savings as the foundation for deriving multiple benefits.

Tools and approaches available to states – and their advantages and disadvantages - for estimating energy systems, environmental, and economic benefits across varying levels of rigor.

How states have supported the use of clean energy through the estimation of multiple benefits.

EPA's Climate Economics Page

EPA's Climate Economics page provides an overview of the analyses EPA has conducted on the effect of various national policy options on the U.S. economy, as well as a summary of the modeling tools and methods used. In addition, it includes information on long term scenarios of climate related economic impacts and non–CO2 greenhouse gases.

Examples of Benefits Analyses

This table provides a summary of benefits analyses (PDF)(8 pp, 108K, About PDF) and findings in 22 clean energy studies. The studies analyze benefits related to energy, emissions, air quality, health, and economics. Information on methods and links to the studies are also included.

Local Government Climate and Energy Strategy Series

The Local Government Climate and Energy Strategy Series provide a comprehensive, straightforward overview of local government greenhouse gas (GHG) emission reduction strategies. Staff can use these guides to plan, implement, and evaluate climate and energy projects. Each guide provides an overview of project benefits, policy mechanisms, investments, key stakeholders, and other implementation considerations. Examples and case studies are incorporated throughout the guides. Topics covered in the guides include energy efficiency, transportation, urban planning and design, solid waste and materials management, and renewable energy.

Quantifying Economic Benefits

EPA provides information on Quantifying Economic Benefits. While geared to state agencies, it will be useful to local governments as well. This page includes an explanation of the economic benefits of clean energy `and climate change policies, as well as key steps in quantifying those benefits. The page also features examples of state analyses of economic benefits and applicable tools and resources.